Ques.no.1: What is strategy?

Explain the various level of strategy in an

organization.
Ans. - The word strategy comes from Greek strategies, which refers to a

military general and combines stratus (the army) and go (to lead). The
concept and practice of strategy and planning started in the military, and,
over time, it entered business and management. The key or common
objective of both business strategy and military strategy is the same, i.e.,
to secure competitive advantage over the rivals or opponents.
Ansoff (1984): Basically, a strategy is a set of decision-making rules for the
guidance of organizational behaviour.
Porter (1996): Developing and communicating the companys unique

position, making trade-offs, and forging fit among activities.

Levels of strategy

There are three different levels of organizational strategy are:

i.

ii.

iii.

Corporate-level strategy- Corporate level strategies are

concerned with overall purpose or objective of the organization; for
example, diversification through joint venture, merger or
acquisition.
Business unit-level- Business unit level strategies address
themselves to issues of a
particular business unit or product
group of an organization-strategy for product development and/or
identification and exploitation of new market opportunities.
Functional level- Functional level strategies (sometimes

called operational strategies) concentrate on particular

functional or operational areas like manufacturing,
marketing, logistics, etc.
For single business companies, corporate level strategies and business
unit level strategies may not be much different. But for multi business
companies like Unilever, business unit level strategies would be quite
distinct from corporate level strategies. Functional level strategies,
however, would be common in both single business and multiple
business companies. The three levels of strategy are not isolated:
these strategies support, complement or reinforce each other for the
achievement of organizational objectives.

Ques.no.2. Specify the interrelationship between strategic

planning and strategic management. Which comes first?
Ans. - A strategic planning also called a corporate planning or perspective
planning. It is a blueprint or document which incorporates details
regarding different elements of strategic management. This includes
vision/mission, goals, organisational appraisal, environmental analysis,
resource allocation and the manner in which an organization proposes to
put the strategies in to action. The concept and role of strategic planning
would be clear if we mention the major areas of strategic planning in an
organization.
First, strategic planning is concerned with environment or rather, the fit
between the environment, the internal competencies and businesses of a
company.
Second, it is concerned with the portfolio of businesses a company should
have. More specifically, it is concerned with changes- additions or
deletions- in a companys product-maker postures.
Third, strategic planning is mostly concerned with the future or the longterm dynamics of an organization rather than its day-to-day tasks or
operations.
Fourth, strategic planning is mostly concerned with growth- direction,
pattern and timing of growth.
Fifth, strategy is the concern of strategic planning. Growth priorities and
choice of corporate strategy are also its concerns.
Finally, strategic planning is intended to suggest to an organization,
measures or capabilities required to face uncertainties to the extent
possible.
All large organisations formulate strategic plans. In 1997, All India
Management association (AIMA) conducted a study to find out about
business plans, strategies, techniques and tools adopted by various Indian
companies. The study results were published in Business Today. Analysed
in terms of company size, bigger companies planned for a longer period.
For 45% of the large companies, the planning period was more than 5
years, but for 70% of the small companies, the period was less than 3
years.
Companies like BHEL, SAIL, NTPC and NHPC have formulated corporate
plans which are linked to the national plans. The 5year planning period of
these companies, however, is not a generalization. Corporate plans of
some of these companies are linked to the national plans, but, not
necessarily of exactly 5-year duration; the duration can be a multiple of 5
years.
Once a strategic plan is prepared, the same is submitted to the senior
management/ top management for their consideration and approval.
Strategic planning and strategic management are intimately related to
each other. Where strategic planning ends, strategic management takes

over; but, both are complementary to each other. They form vital links in
an integrated chain in corporate management. Both are continuous
process. Strategic management may be more continuous, because it
involves implementation and monitoring also.
Ques.no.3.What is a mission statement? Differentiate between a
mission statement and a vision statement.
Ans. - According to Peter Drucker - A business is not defined by its name,
statutes or articles of incorporation. It is defined by the business mission.
Only a clear definition of the mission and purpose of the organization
makes possible clear and realistic business objectives.
The mission statement of a company is variously called a statement of
business principles. A mission statement is many in one. It embodies the
business philosophy of a companys decision makers, implies the image
the company wishes to project for itself, reflects the companys selfconcept; indicates the companys principal product or service areas and,
the customer needs the company seeks to satisfy.
A clear distinction exists between the Mission and Vision.
Mission is concerned more with the present where Vision more with the
future. The mission statement answers the question: What is our
business? Where the Vision statement answers the question: What do you
want to become or, which way should we be going? The mission
statement focuses on the present strategic thrust, while vision statement
outlines the strategic path. All visionary companies have a vision
statement.
Most progressive companies develop both a mission statement and a
vision statement. Indian Oil Corporation (IOC) is a good example. Vision
and Mission statements of IOC are:
Vision: Indian Oil aims to achieve international standards of
excellence in all aspects of energy and diversified business with
focus on customer delight through quality products and services.
Mission: Maintaining national leadership in oil refining, marketing
and pipeline transportation.
Vision and Mission statements is generally found in the beginning of
annual reports of companies. These statements are also seen in the
corporate or long-term strategic plans of companies. These also appear in
many company reports or documents like customer service agreements,
loan requests, and labour relations contracts, etc. Many companies also
display them at prominent points or locations in company premises.

Ques.no. 4: What is SWOT analysis? Explain SWOT analysis in the form

of a matrix?
Ans. - A tool used by organizations to match their internal strengths and

weaknesses with factors of the environment. This is done through SWOT

analysis. In SWOT analysis, S and W relate to internal competence
factors, and O and T pertain to external environment factors.
Strength is a resource, skill, capability or any other advantage relatives to
competitors and in relation to markets.
A weakness is a limitation or deficiency in resource, skills and capabilities
or any other disadvantage relative to competitors which impedes
performance of an organization.
SWOT analysis is a useful tool to analyse the extent to which strategy of
an organization and its more specific strengths and weaknesses are
capable of dealing with the changes in the business environment. And,
this would decide whether a particular factor in the environment is an
opportunity or threat to the organisation with reference to the particular
strategy.
For systematic SWOT analysis, major strengths and weaknesses of the
organisation for the strategy should be worked out. Then, the important
factors in the environment relevant to this strategy should be identified.
Finally, the strengths and weaknesses should be matched with the
environmental factors through matching analysis or a matrix.
If threats are more than opportunities, the environment is to be
considered hostile unless some threats are converted in to opportunities
by working on the weaknesses. If opportunities are equal to threats, the
matter should be put to vote of the senior/ top management for decision.

Ques.no.5. Define corporate turnaround? Distinguish between

surgical and nonsurgical turnaround. Explain with some
examples?
Ans. - Corporate turnaround is defined as organization recovery from
business decline or crisis. Business decline for a company means
continuous fall in turnover or revenue, eroding profit, or accrual or
accumulation of losses. So, business or organizational decline, like
business performance, is understood in relative terms, that is , compared
with the past. But, some strategy analysts describe business decline in
terms of current comparisons also. Corporate crisis means deepening or
perpetuation of a decline. Turnaround strategies are usually required for
crisis situations. If organizational decline is not continuous or severe,
corporate restructuring is provide the solutions.
Corporate or business decline manifests in many forms or symptoms,
including profitability. These symptoms are actually different performance
criteria of companies. Major symptoms or criteria or situations which
signal towards the need for a turnaround strategy are:
Steadily decline market share;
Continuous negative cash flow;
Negative profit or accumulating losses;
Falling share price in a steady market;
Mismanagement and low morale.
SWOT Analysis for an International Retail Chain Seeking Entry into
the Indian Market
KEY ENVIRONMENTAL FACTORS
Strength/weaknesses
International

New

Customer Choice
Technology

Growth Exposure
Major Strengths
Capacity to innovate
0
0
Market research
0
0
Global base/ International
0
0
Major weakness
New in India/Developing
Countries
0
0
Existing brand suited for
0
0
US/ European markets
High cost products
T
0
O (Opportunity

Competition

&Preferences

T
T

T
2

Market

T
T

5
6
T(Threats)
1
1
0
O-T
1
4
6
--- indicates neither opportunity nor threat

3
0

3
0

In SWOT analysis above the table, opportunities far outweigh

threats (O-T= 11) shown in the last row. On this basis, it can be said
that the environment is project or strategy friendly and the project is
recommended. If threats are more than opportunities, the
environment is to be considered hostile unless some threats can be
converted into opportunities by working on the weaknesses. If
opportunities are equal to threats, the matter should be put to vote
of the senior/top management for decision.

Ques.No.6: What are the major characteristics of an effective

strategy evaluation system? Analyse these characteristics.
Ans. - In some companies, strategy evaluation simply means performance

appraisal of the organization. This is also not correct. The evaluation

system should be balanced and follow some norms and standards.
Strategic analysts have laid down certain basic requirements which
evaluation should comply with to be effective.
First, strategy evaluation process or measures should be meaningful.
These should specifically relate to the objectives/ targets and the plan.
There should be clear focus and no ambiguity.
Second, strategy evaluation and control process should be economical.
Third, the evaluation process should conform to a proper time dimension
for control and information retrieval or dissemination. Time dimension of
control should coincide with the time span of the activity or the
implementation phase. Also, information on developments or feedback
should be timely to make evaluation and control more appropriate.
Fourth, strategy evaluation system should give a true picture of what is
actually happening. The objective of evaluation is not fault finding.
Sometimes, performance may be overshadowed by external factors or the
environment.
Fifth, strategy evaluation process should not dominate or curb decisions; it
should promote mutual understanding, trust and common cause. All
functional and operational areas should cooperate with each other in
evaluating and controlling strategies. Strategy evaluation process should
be simple and not too complex or restrictive. Complex evaluation systems
may confuse managers and result in lack of accomplishments.
It is true that there may not be any ideal or the only strategy evaluation
system. All organizations are unique in themselves in terms of
vision/mission, objectives, size, management style, strengths,
weaknesses, organizational culture, etc. All these together determine the
exact nature of the evaluation system, as also the implementation
process, which is most suitable for the organization.